The Experts Don't Know What's Going to Happen...

...but they kind of agree about what did happen. A panel put together by the New York Review of Books was held on April 30, 2009 @ The Metropolitan Museum of Art. The discussion was transcribed in its latest issue (6/11/09), How To Deal With the Crisis. The panel included such luminaries as Bill Bradley (U.S. Senator-NJ (D) 1979-1997; managing director at merchant bank Allen & Co.), Niall Ferguson (Professor of History @ Harvard, Senior Fellow @ Hoover Institute), Paul Krugman (but of course, just awarded the Nobel last year), Nouriel ("Dr. Doom") Roubini, doomsayer extraordinaire (Distinguished Professor of Economics @ NYU Stern School of Biznez and Chairman of RGE Monitor, George Soros (Chairman of Soros Fund Management LLC, well-known macroeconomic trend cruncher and legacy builder, who is distinctly unhappy with the "free market paradigm"--I think if he met John Galt, he'd spit in his eye) and Robin Wells (who co-authored the book Economics with Paul Krugman and made some very astute comments herself.

Ferguson joisted with Krugman, especially about the potential hyperinflationary effects of the government's printing money, not specifically regarding backing up all the bad debt in the financial system but decrying the fiscal stimulus. On the other hand, Paul (who believes that all this talk about hyperinflation is a way to wage war against further stimulus) despaired for the near future of ordinary Americans, which is 99.9% of all of us who are being laid off to the tune of 600,000+ per month.

I thrilled to Paul's thundering words:

The other thing not to miss is the importance of a strong social safety net. By most accounts, most projections say that the European Union is going to have a somewhat deeper recession this year than the United States. So in terms of macromanagement, they're actually doing a poor job, and there are various reasons for that: the European Central Bank is too conservative, Europeans have been too slow to do fiscal stimulus. But the human suffering is going to be much greater on this side of the Atlantic because Europeans don't lose their health care when they lose their jobs. They don't find themselves with essentially no support once their trivial unemployment check has fallen off. We have nothing underneath. When Americans lose their jobs, they fall into the abyss. That does not happen in other advanced countries, it does not happen, I want to say, in civilized countries.

In all the millions of words (along with the trillions of dollars) printed about this re/de/pression started December 2007, the pundits often overlook human suffering.

Niall became sarcastic, invoking the "lessons" of the 1970s:

The lesson of economic history is very clear. Economic growth does not come from state-led infrastructure investment. It comes from technological innovation, and gains in productivity, and these things come from the private sector, not from the state.

What could be more technologically innovative than synthetic CDOs (collateralized debt obligations) built according to mathematical models based on highly fallible projections? Or credit default swaps? Or securitization? And everyone agrees they are at the heart of this horrible economic disintegration.

As far as productivity goes, well, when you fire 4 out of 5 people in a company, that one person has to pick up the slack and eureka! productivity soars. So don't worry, Niall. Unemployment will continue to grow.

The Only Value: Credibility

In an age where everyone is a sell-out, the only value becomes credibility. It's so rare.

Teach Me To Communicate to the Internet Generation

I am totally out of touch. After becoming a casualty of the Re/Depression (my consultancy was lopped off the FY 2010 budget), I decided to utilize my lengthy career placement background and academic prowess (I graduated with top honors in English from college with a 1390 SAT dating back decades). I'd help people get jobs and tutor high school students in the SATs and edit college or graduate school papers with grammar and coherence in mind. So far my clients have gotten As. I didn't go whole hog and sign up with an online broker to write the term papers myself for a hefty fee.

However, I'm having difficulty communicating by email with prospective clients. This is a standard email exchange from a youngster in response to my ad:

hey my name is [young person] and ii saw your ad for career advisement and was just interested in knowing what you can do for me??
thank you for your time and ii will be waiting for your reply.

So I respond:

I can help you write your resume, cover letter, and thank you note. We can practice job interviewing (very important). I can teach you how to search
for jobs and network. I have a lot of experience in this area.

You let me know what you need. My name is [Cassandra].

He writes back:

ii juss need a job.. basically.. I have a resume and everything
--nyzghettoromeo

So I put the pedal to the metal [that probably ages me, too]:

I can look over your resume and see if it'll lead you to a job. Does it
display your qualifications well? Do you tell potential employers what you
can do for them? What kind of job are you looking for? You have to sell
yourself in a different way for a different kind of job. If you want an
office job, what kind of computer skills do you have? If you want a sales
job, how are you in person or on the phone? If you want a retail job, are
you good in customer service? Are you a team player? Do you have any
professional experience?

After you figure out the answers to these questions, then you can go to
internet job search engines, upload your resume and check it out.

And he comes back with:

okay well maybe you can help me, I'm 19 years old attending CUNY York
College in jamaica. I have experience in hospitality, considering the fact
that ii worked in a restaurant in manhattan as a Banquet busser/waiter. I
attended Queens Vocational Technical High School and gained experience in
electrical installation, therefore I have basic knowledge in the
electrical field. I received my Regents diploma and completed internship
in electrical installation, in college my major is Physicians Assistant,
I'm trying to pursue a career in the medical field. I have my license for
Phlebotomy and EKG tech. I am certified by NHA and am currently doing
Internship at a medical office in elmhurst queens.
If any of these qualities are helpful to obtain a job, please contact
me and I seriously need help finding a job especially during these tought
times. I will be awaiting a reply. thank you.

I reply:

You have a lot of education and experience that can be presented well to a potential employer. I have some ideas for you. This is the way I work: I
meet with you and go over your employment materials, focusing on how you can
put your best foot forward to make the most of the chances you get. Most
resumes and cover letters are not very good or effective. Most people have
no idea how to act in a job interview. One mistake can change an employer's
mind.

I've been doing this for a long time. Consider it an investment in your
future. My fee is $20 per hour for students.

And the coup de grace (his response):

lol no thank you..

I am a dinosaur reared on reading books, absorbed in their meaning, soaking in language. I've placed all sorts and sizes of people in jobs, including executives and those with disabilities (known as "barriers to employment"]. I come with a pedigree. But I am out of touch with the prevailing winds.

I'm not saying I have to dumb down. But I have been doing this work for a few months now and I constantly say to myself (aside from "Stop talking to yourself!"), will this person be put off by proper grammar? Or words like "available"? Or punctuation without emoticons ):?

How can I learn to write blog? Or email? Or IM? Should I forget everything I've learned? Should the Constitution be rewritten according to Twitter, to make it comprehensible to the majority?

I'm not saying I'm impervious to the degradation of anonymous immediacy provided by the internet. I'm much more impatient, nay, impulsive, telling the computer "c'mon!" as it boots up too slowly for me, tossing off a retort with a click of the SEND button rife with spelling errors and tortured meaning. I haven't written anything in a haze of drunken vengeance. But the shame!

I was the only Editor's Choice on Leonhardt's NYT article

...with the most readers' recommendations:

Time For Bank Creditors to Share the Pain? in Leonhardt's Economic Scene column.

Comment #21.

EDITORS' SELECTIONS April 29, 2009 2:24 pm

Let's not fool ourselves: Obama hired Summers and Geithner. He said to you airily when you soft-balled him that there are others besides the Wall Street Clinton brain trust involved in saving the U.S. economy. Who? Paul Volcker, who was trotted out for a photo op back during President-elect times and hasn't been heard from since?

The idea that the guys who created the destruction are the best for reconstruction is like saying because a fox knows how to kill a chicken he's the best one to keep it alive.

Geithner is bypassing Congress (taxation without representation indeed) by doling out money from the Treasury.

In any case, the idea that printing money out of thin air and shoveling it into the gaping maw of failed institutions will somehow unfreeze credit is belied by a rival publication on 4/20/09 (you'll print this, right, even if I quote another source--I know you've covered this story also):

"According to a Wall Street Journal analysis of Treasury Department data, the biggest recipients of taxpayer aid made or refinanced 23% less in new loans in February, the latest available data, than in October, the month the Treasury kicked off the Troubled Asset Relief Program."

The former chief economist of the IMF, Simon Johnson, believes that the oligarchs (or "overlords") of the financial institutions have already assumed the reins of government. Basically they own the Treasury.

Witness Geithner's brilliant plan to remove toxic assets with a trowel by subsidizing unregulated, opaque industries like hedge funds/private equity firms to purchase such assets and indemnifying them from any losses. Again, lemon socialism: privatized profits, socialized losses.

Don't be fooled by a pretty face. All that matters is policy. We're already past the tipping point to change the economic paradigm. Banks are reporting profits (who wouldn't, with cheap money thrown at them) and want to wiggle out of their obligations to the shareholders (us).

Let's see if banks represent an opportunity to private capital without a government guarantee. If not, public capital should demand its due. To paraphrase Arlen Specter, "there should be an uprising."


— Kathi Berke, New York City

Recommend Recommended by 13 Readers

Europeans are Noisy and Angry, While Americans Man the Internet Barricades (those Twits!)

I've read a number of articles lately questioning why Americans aren't angry in the face of economic hardship and injustice whereas the Europeans take to the streets. A NY Times article by Steven Greenhouse, their labor reporter, offers a dispiriting narrative between the lines. As opposed to the photo, which actually has the caption "THEM" under a crowd of angry European workers protesting in the streets, the picture of American labor is far more tame and sobering.

One assertion is that our government is more trustworthy.

Greenhouse quotes Leo Gerard, president of the United Steelworkers union, who said, "I actually believe that Americans believe in their political system more than workers do in other parts of the world." He said large labor demonstrations are often warranted in Canada(!) and European countries to presure parliamentary leaders.
I'll come back to him later.

Americans are also proud of their rugged individualism. Mentioned but barely emphasized is the downside of an American society built on individualism as opposed to community: shame. If rugged individualism is the guiding principle of success, then you are solely to blame for your misfortune. Your fate has nothing to do with socio-economic forces, only your own failings.

Greenhouse quotes David Kennedy, a historian of the Depression-era time period up until WWII, who cites a 1940 study by social psychologist Mirra Komarovsky, whose interviews of the Depression-era unemployed found "the psychological reaction was to feel guilty and ashamed, that they had failed personally."

This sentiment is currently borne out in a quote from a wsj.com article about people moving back with relatives because they've run out of money and options. The following anecdote from the story is about Pam Wilson, a 37-year-old social worker who had made $60,000 and shared a home in Kentucky with her mother:

After unsuccessfully looking for work, depleting her $25,000 in savings and exhausting her unemployment-insurance benefits, she realized she and her mother couldn't afford to live on their own. So she made the difficult decision for them to move back to Georgia to live with her two sisters. The four women share the house.

Ms. Wilson and her mother share a queen-size bed. Ms. Wilson cooks and says she sometimes does extra things around the three-bedroom house like making her sisters' bed, or taking out the trash.

"You just want to make sure that you're not perceived as some type of burden or freeloader," she said. When company comes over, she feels like she might be in the way and retreats to her room. She knows she is welcome, but can't help feeling ashamed.

Not only is conflict muted by shame, there's also fear. Not merely of murderous strikebreakers, but of future consequences.

When desperation and anger finally overcame shame during the thirties:

[W]orkers' protests increased in number and militancy. They were fueled by the then-powerful Communist and Socialist Parties and frustrations over continuing deprivation. Workers also felt they had President Roosevelt's blessing for collective action because he signed the Wagner Act in 1935, giving workers the right to unionize.

From Wikipedia:

The National Labor Relations Act (or Wagner Act) is a 1935 United States federal law that protects the rights of most workers in the private sector to organize labor unions, to engage in collective bargaining, and to take part in strikes and other forms of concerted activity in support of their demands.

When WWII was over and relative prosperity returned, fueled by unionization and big government programs like the G.I. Bill, Congress used the left leaning sentiments of those involved in collective action in the thirties during the House UnAmerican Activities Committee and McCarthy hearings as a cudgel to consolidate power against the overblown threat of the Communist menace (not unlike the fearmongering of the Bush-Cheney years). People who joined collective movements in the thirties were branded as traitors and were blacklisted and imprisoned.

Reagan put the final nail in the coffin of unionization by firing all 11,500 air traffic controllers on strike in 1981.

But the numbers tell the story: Last year, American unions engaged in 159 work stoppages, down from 1,352 in 1981, according to the Bureau of National Affairs, a publisher of legal and regulator news.

Many opinionators in Greenhouse's article spout the party line that Americans are more effective in their internet protests, using energy otherwise wasted in angry, noisy demonstrations. However, this belief (that the internet, or virtual activity, is equivalent to collective action) may be a way to divert attention and let the vox populi think they're actually making a difference.

The most hilarious statement in Greenhouse's article comes from Gerard. (See, I told you I'd mention him again. Now go back in the article and find the first mention).

Demonstrations are less needed in the United States, he said, because often all that is needed is some expert lobbying in Washington to line up the support of a half-dozen senators.

If "expert lobbying" is what's needed to right outrageous wrongs, then big corporations must be ecstatic as they pour millions of dollars into campaigns and strategies to shut down the Employee Free Choice Act.

The Act, which would allow workers to join a union automatically upon employment, is discussed succinctly in David Frieboth's article in the Seattle Times. He lays out the competing narrative against the Act (it bars secret elections, it takes away individual choice) and addresses the realities behind the need for the Act. Employers protest that unionization is well-protected under current law. Freiboth politely disagrees.[My apologies to you, David, for taking so much of your content, but I feel your work is invaluable.]

Scare tactics that highlight problems with union intimidation during organizing campaigns are just that — scare tactics — designed to subvert the essence of the issue.

Problem is, the current law that protects workers' freedom to choose to bargain collectively has been perverted. When faced with a union organizing drive, 25 percent of companies fire the "ringleaders," according to the National Labor Relations Board.

Although this practice is technically illegal, the bar for proving union-organizing discrimination is so high and the penalties so low that when workers express a desire to unionize they are, in effect, risking their livelihoods.

In addition, employees who want to form unions are often threatened with plant closings, offered bribes, spied on and intimidated, according to the Center for Economic and Policy Research. The result? Only 8 percent of private-sector workers actually belong to unions, even though 58 percent of U.S. workers say they want a union in their workplace — the highest percentage in 25 years — based upon a report by the independent researcher firm Hart and Associates.

I only hope that President Obama (who voted for the original act while in the Senate) can persuade Congress to resist the lobbying currently muddying the Washington swamp, an activity that a major labor leader says is all that is needed to achieve goals to strengthen labor in a time of escalating unemployment and makeshift Hoovervilles.

Larry Summers Should Be Fired. Now.

The escalating official unemployment rate made the front page of both the Wall Street Journal and the New York Times. Above the fold. It went from 7.6% in January 2009 to 8.5% in March 2009. Many economists predict the jobless rate to rise above 10% by later this year.

The Wall Street Journal article modifies the official rate further:

A broader gauge of unemployment--which counts Americans who want work but quit searching and people who want full-time jobs but settled for part-time work--climbed to 15.6%.

But Larry Summers, the director of the White House's National Economic Council, isn't worried. The stock market has improved. He can see spring coming:

"You couldn't find any sprouts of green. Now while the statistics remain very mixed, you can find some sprouts of green.

But we must be realistic, says he:

Mr. Summers said he expects several more months of payroll declines, noting, "it now appears fairly clear that the economy is going to be losing jobs at a substantial rate for some months to come."

One reason Summers may not be too concerned about unemployment woes, particularly his own, is that also according to today'sNew York Times, he earned more than $5 million last year from the hedge fund D.E. Shaw and $2.7 million in speaking fees to Wall Street firms that received government bailout money:

Last year, he reported making 40 paid appearances, including a $135,000 speech to the investment firm Goldman Sachs, in addition to his earnings from the hedge fund, a sector the administration is trying to regulate.

Mr. Summers's role at the White House includes advising Mr. Obama on whether--or how--to tighten regulation of hedge funds, which engage in highly sophisticated financial trading that many analysts have said contributed to the economic collapse.

It is a sick joke to pretend that the Obama economic team is concerned with Main Street. Summers, despite anything that comes out of his mouth, has worked very hard to preserve the bailiwick of Wall Street.

Back in the waning days of the Clinton Administration, Larry Summers fiercely opposed the regulation of derivatives such as credit default swaps, which are at the center of this man-made economic debacle, according to the blog of The Sunlight Foundation, which is dedicated to transparency/

The chairman of the Commodity Futures Trade Commission (CFTC) Brooksley Born issued a first call for her regulatory commission to have power to oversee financial derivatives.

Her credo was, "An unregulated derivatives market could “pose grave dangers to our economy.”

While previous legislative attempts had been made earlier, Born’s efforts were the most direct and threatening to the financial industry. During an April 1998 meeting of the President’s Working Group on Financial Markets, Federal Reserve chairman Alan Greenspan, Clinton Treasury Secretary Robert Rubin (and later Secretary Larry Summers), and Securities and Exchange Commission (SEC) chairman Arthur Levitt opposed Born’s efforts and attempted to derail her.

Not only did Summers object to the regulation of financial derivatives and credit default swaps, he worked hard with Phil Gramm as the driving force on the Commodities Futures Modernization Act, which exempted swaps and derivatives from regulation by both the CFTC, which had already implemented rules that it would not regulate swaps and derivatives, and the SEC. The final version passed in December 2000, barely a whisper amid the tumult of the 2000 election.

This is the fox guarding the hen house. Unless the U.S. economy gets help from the bottom up instead of the top down, we are in for a long fall. We need someone like a special prosecutor to investigate the causes of this calamity that is only deepening. We don't need the architects of destruction to be in charge.

The Government Investigates U.S. Torturers (the Spanish Government, that is)

Rachel Maddow has been calling for it, along with Jonathan Turley, the constitutional lawyer and MSNBC pundit. What is it? The prosecution of those responsible in the Bush administration for giving a flimsy legal basis for the torturing of thousands of "enemy combatants". Finally, there is going to be an investigation as reported in the New York Times, but it doesn't emanate from the Obama administration. The preliminary moves towards prosecution are coming from Spain.

A Spanish court has taken the first steps toward opening a criminal investigation into allegations that six former high-level Bush administration officials violated international law by providing the legal framework to justify the torture of prisoners at Guantánamo Bay, Cuba, an official close to the case said.

The case, against former Attorney General Alberto R. Gonzales and others, was sent to the prosecutor’s office for review by Baltasar Garzón, the crusading investigative judge who ordered the arrest of the former Chilean dictator Augusto Pinochet. The official said that it was “highly probable” that the case would go forward and that it could lead to arrest warrants.